Employee Performance Evaluation Laws: 3 Important Performance Review Laws in The U.S. + Rest of The World

Employee performance evaluation laws as a topic can be a bit daunting. Performance evaluations are an important aspect of the workplace, as they provide an opportunity for employers to assess employee performance and identify areas for improvement.

However, it is important for employers to be aware of the laws surrounding performance evaluations in order to ensure compliance and avoid any legal consequences.

So let’s discuss the federal and state performance evaluation laws that employers need to be aware of, as well as some best practices for conducting performance evaluations.

By understanding and following these employee performance evaluation laws and best practices, employers can create a fair and effective performance evaluation process for their employees.

Before we begin, we just need to point out that what we are pointing out below is not legal advice and we are by no means acting as your lawyer. This is just for informational purposes.

How to make sure you’re conducting performance reviews the right way!

By far the biggest and most common mistake made with performance reviews has nothing to do with performance review laws and regulations. The biggest mistake people make with performance reviews is often in the method.

While they are crucial to the success of an organization, performance reviews don’t mean a lot if the entire process is cumbersome and tedious to the employees and the reviewers alike. Outdated practices such as Excel performance review templates clog the review process way too much to be effective in any way.

That is why you should consider digitizing your performance appraisals. Using performance review software that is integrated into your everyday operations can save you all the time in the world both conducting and analyzing the reviews.

For Microsoft Teams or Outlook users, the best option is definitely Teamflect. Teamflect lets users conduct and analyze entire performance review cycles through Microsoft Teams, through customizable and intuitive digital performance review templates.

Why don’t you try conducting your next batch of performance reviews over Teams and see just how intuitive the entire process is, for absolutely free? You can try Teamflect, for as long as you want, without signing up, with no payment!

Federal Performance Evaluation Laws

Performance evaluations in the United States are subject to a variety of federal laws that protect the rights of employees and prohibit discrimination in the workplace.

Title VII of the Civil Rights Act of 1964 is a federal law that prohibits employment discrimination on the basis of race, color, religion, sex, and national origin. This law applies to all aspects of employment, including performance evaluations. Employers are prohibited from using performance evaluations to discriminate against employees on the basis of their protected characteristics.

The Americans with Disabilities Act

The Americans with Disabilities Act (ADA) is another federal law that governs performance evaluations. The ADA prohibits discrimination against individuals with disabilities and requires employers to provide reasonable accommodations to enable employees with disabilities to perform their job duties.

In the context of performance evaluations, this means that employers must ensure that their evaluation process does not discriminate against employees with disabilities and must provide any necessary accommodations to enable these employees to fully participate in the evaluation process.

The Age Discrimination in Employment Act

The Age Discrimination in Employment Act (ADEA) is a federal law that prohibits discrimination against employees who are 40 years of age or older. This law applies to all aspects of employment, including performance evaluations. Employers are prohibited from using performance evaluations to discriminate against employees on the basis of their age.

It is important for employers to be aware of these federal laws and to ensure that their performance evaluation process complies with them. Noncompliance with these laws can result in legal consequences for the employer.

Sources:

• “Title VII of the Civil Rights Act of 1964.” U.S. Equal Employment Opportunity Commission. https://www.eeoc.gov/laws/statutes/titlevii.cfm
• “The Americans with Disabilities Act.” U.S. Equal Employment Opportunity Commission. https://www.eeoc.gov/laws/statutes/ada.cfm
• “Age Discrimination in Employment Act.” U.S. Equal Employment Opportunity Commission. https://www.eeoc.gov/laws/statutes/adea.cfm

State Performance Evaluation Laws

In addition to federal laws, states may also have their own laws governing performance evaluations. These state laws may provide additional protections to employees or may have different requirements for employers. It is important for employers to be familiar with the performance evaluation laws in their state and to ensure compliance with all applicable laws.

An example of a state law related to performance evaluations is California’s Fair Employment and Housing Act (FEHA). Under the FEHA, employers are prohibited from using performance evaluations to discriminate against employees on the basis of protected characteristics, such as race, religion, gender, and sexual orientation. The FEHA also requires employers to provide employees with a written performance evaluation if the employee requests one.

Another example is the Illinois Human Rights Act (IHRA), which prohibits employers from using performance evaluations to discriminate against employees on the basis of protected characteristics, such as race, age, and disability. The IHRA also requires employers to establish a written performance evaluation system that is based on objective criteria and is applied consistently to all employees.

It is important for employers to be familiar with the performance evaluation laws in their state and to ensure compliance with all applicable laws. Failure to comply with state performance evaluation laws can result in legal consequences for the employer.

Sources:

• “Fair Employment and Housing Act.” California Department of Fair Employment and Housing. https://www.dfeh.ca.gov/statutes-regulations/feha/
• “Human Rights Act.” Illinois Department of Human Rights. https://www2.illinois.gov/dhr/Pages/HumanRightsAct.aspx

Can I sue my employer for a bad performance review?

In terms of legality, receiving a positive work performance evaluation does not ensure ongoing employment, and employers generally have the right to terminate employees for various reasons, as long as they do not infringe upon anti-discrimination laws or other legal safeguards.

Nevertheless, if an individual receives a favorable work performance review but their employment is terminated due to a protected attribute like race, gender, religion, age, or disability, the employee may have the basis to file a lawsuit against their employer for wrongful termination or discrimination.

Recommended Reading: Stan Melos

If you want to dive further into the legal discussion surrounding performance appraisals, we can wholeheartedly recommend Stan Melos’s comprehensive book on this very topic: The Importance of Valid Selection and Performance Appraisal. In this work, Melos goes deep into detail on the history of litigation surrounding performance appraisals, including ” multi-million dollar settlements involving the likes of Coca-Cola, Home Depot and more.” (Malos, 2005).

Malos, Stan. “The Importance of Valid Selection and Performance Appraisal.” Employment discrimination litigation: Behavioral, quantitative, and legal perspectives 16 (2005): 373.

Are performance reviews mandatory?

The simple answer is: No. According to the U.S. Department of Labor, The Fair Labor Standards Act does not force organizations to conduct performance appraisals or evaluations. Regular performance reviews are more dependent on the agreement between the employee and the employer.

Are performance reviews confidential?

No matter how you spin it, performance reviews are confidential and they are taken as sensitive information. Regardless of one’s position, parties irrelevant to the performance evaluation should not be privy to the information discussed in it. There are, however, certain levels to this confidentiality:

Internal Confidentiality: Within an organization, performance reviews are often considered confidential information. The details of an employee’s performance, feedback, and any improvement plans are shared only with those who have a legitimate need to know, such as supervisors, HR personnel, and sometimes upper management.

Legal Compliance: Some jurisdictions have laws governing the privacy of employee information. In certain places, employers may be required to keep performance reviews confidential, and employees may have the right to access their own performance records.

Performance Evaluation Best Practices

Just because you are conducting performance reviews in accordance with the surrounding employee performance evaluation laws, doesn’t mean you are doing them correctly!

While the laws and regulations surrounding performance reviews, or employee performance evaluation laws, as we saw it fit to refer to them as are important in protecting both employee and employer, you still need to make the most of your performance evaluations.

Employee performance may be a bit tricky but if you keep these simple employee performance review best practices in mind, you will surely see their impact on productivity!

Setting Clear Goals & Expectations

Setting precise performance goals and expectations is an excellent practice. This means that employers should be very clear about the standards and objectives for each employee’s performance on the job and should give regular updates on how well they’re doing. This enables employees to concentrate their efforts on living up to these standards by helping them comprehend what is expected of them.

Continuous Feedback

Feedback shouldn’t be reserved and limited to performance evaluations. Providing continuous feedback leading up to the performance review itself creates an ongoing dialogue between employees and their leaders. This dialogue lets everyone go into the performance evaluation knowing what is expected of them, and leave it without ever feeling like they were blindsided by anything.

Performance Review Biases

It is also important for employers to ensure that their performance evaluation process is fair and unbiased. Performance review biases can come back to haunt employers. Avoiding subjectivity and basing evaluations on objective criteria that are applied consistently to all employees is an absolute necessity in both the legal sense and in terms of basic human decency.

Employers should also ensure that their evaluations are not influenced by biases or stereotypes and do not discriminate against employees on the basis of protected characteristic.

Performance Review Software

Making sure you cover the three important bases we’ve listed above might seem like it is too big of a challenge but in fact it is quite simple. All you need is the correct performance review software to help you.

While there are many great performance review software you can explore (See our list: Top 14 Performance Review Software), the best option for Microsoft users is Teamflect! Teamflect offers some of the best performance review capabilities in the market such as:

• An extensive performance review template library
• Customizable performance review templates
• Automated review cycles
• Real 360-degree feedback
• And so much more!

Performance Review Laws: Rest of the World

Now that we’ve discussed the laws around performance reviews in the United States, let’s take a look at the rest of the world and see what kind of laws they have surrounding performance appraisals.

Performance Review Laws in Germany

In Germany, performance reviews are not explicitly regulated by specific laws. However, there are legal principles and regulations that indirectly affect the performance review process. The chief of them, being: Equal Treatment Act (AGG). According to the Equal Treatment Act, employment relationship discrimination is prohibited based on:

• Age
• Disability
• Race
• Religion or belief
• Gender
• Sexual orientation
• Country of origin

This act has three central ways of defining what discrimination is:

Direct discrimination occurs when an individual is treated in a manner that is less favorable due to a characteristic protected by the General Equal Treatment Act (AGG).

Indirect discrimination refers to the application of a policy, criteria, or practice to a group of workers, which disproportionately disadvantages individuals possessing a protected characteristic under the AGG or any other unjustified reason, unless there is an objective justification for the discrimination.

Victimization takes place when an employee is dismissed because they have taken action related to discrimination based on a protected characteristic, such as submitting a grievance concerning discrimination.

Performance Review Laws in France

While France does have some laws that indirectly affect how performance reviews should be conducted, there is another important topic to discuss when it comes to performance reviews and France. According to recent supreme court decisions:

“Employers who do not discuss workload and work/life balance issues during annual employee performance reviews can be considered in breach of their duty of care” (Natacha Lesellier)

Employers have a duty to care for their employees and as the French Supreme Court, if an employee experiences and illness or accident (Mental or physical), and the reason of their predicament is caused by an employer neglecting their duty of care, then it is considered an inexcusable fault.

Performance Review Laws in The United Kingdom

There are no direct laws concerning performance reviews in the UK. That being said, there are some laws that indirectly cover that area. One of which is their employment law’s section against unfair dismissals. An employee cannot be dismissed from their job for certain reasons. These reasons include but aren’t limited to:

• Requesting maternity or paternity leave
• Whistleblowing
• Raising Health & Safety issues
• Being part of a trade union
• Asserting legal rights (e.g. asking to be paid minimum wage)

Another UK law around performance appraisals is the Equality Act of 2010. This law states plain and simply that discriminating against any employee based on any of their protected characteristics is against the law and can result in a discrimination claim against your business.

Performance Review Laws in Spain

In Spain, the legal framework for performance reviews is primarily governed by the Workers’ Statute (Estatuto de los Trabajadores), which sets out the rights and obligations of both employers and employees.

However, specific regulations regarding performance reviews may vary depending on collective bargaining agreements, industry-specific regulations, or individual employment contracts.

Performance Review Laws in Canada

There aren’t any laws directly about performance reviews, however, Part 3 of Canada’s Labour Code covers all the areas mentioned in previous entries of this list.

Performance appraisals aren’t mandatory in Canada. In fact, in an article published by Monkhouse Law, they state that there aren’t any laws enforcing employers to conduct mandatory performance reviews.

That being said, they argue that an employee who is terminated without going through a performance review may be able to fight the termination.

Performance Review Laws in Australia

Australia doesn’t have specific laws on performance reviews. That being said the Fair Work Act of 2009 covers everything around performance reviews.

In fact, the Australian government itself encourages frequent performance appraisals as a away of measuring performance in the workplace. Curious about how often you should conduct performance appraisals? You might want to refer to this article: How often should you conduct performance reviews?

Some of the rights covered by the Fair Work Act of 2009 are:

• Workplace rights
• The right to engage in industrial activities
• The right to be free from unlawful discrimination
• The right to be free from undue influence or pressure in negotiating individual arrangements.

Performance Review Laws in China

China does not have specific national laws or regulations that govern the process of performance reviews in private-sector companies. However, labor laws in China do provide some general guidelines and principles related to employment, which could indirectly impact performance reviews.

• Labor Contract Law: China has a Labor Contract Law that governs various aspects of employment relationships, including the terms and conditions of employment contracts. Employers are generally required to provide written employment contracts to their employees, which should specify the rights and responsibilities of both parties, including performance expectations.

• Equal Treatment: Chinese labor laws require that employees be treated fairly and equally. This could mean that performance reviews should be conducted fairly and without discrimination based on factors such as gender, age, or ethnicity.

• Termination and Severance: The Labor Contract Law also includes provisions related to the termination of employment contracts. Performance issues can be a valid reason for termination, but there are strict procedures and requirements that employers must follow when terminating an employee.

Performance Review Laws in Russia

Russia does have labor laws and regulations that govern various aspects of employment, including performance reviews. So here are Russia’s performance review laws and regulations.

• Labor Code: The main legal framework governing labor relations in Russia is the Labor Code of the Russian Federation. The Labor Code outlines the rights and obligations of both employers and employees.
• Performance Appraisals: While the Labor Code does not provide specific details on how performance reviews should be conducted, it does emphasize the importance of regular assessment of employee performance. Employers in Russia typically conduct performance appraisals to evaluate employees’ work and provide feedback.